Entrepreneurs in emerging and developing economies face many challenges curtailing their ability to finance and grow their business ventures. Climate change provides new opportunities for entrepreneurs to gain access to finance and contribute toward more climate-resilient economies. The objective of this chapter is to outline the dimensions of entrepreneurial financing that are sensitive to levels of climate change with emphasis on the financial services sector's role in reacting to these changes. An analysis of current extant literature will be explored, and evidence supporting effective entrepreneurial financing will be used to develop a theoretical framework for climate change and entrepreneurial financing to foster a more climatic conditions-sustainable economy. The literature in this chapter indicated the need for establishing the impact of climate change on entrepreneurial financing in the financial services sector in order to provide recommendations that can direct funding more effectively towards climate-resilient activities and a more climatic conditions-sustainable economy.
TopThe Core Elements Of Entrepreneurial Financing
Entrepreneurship, according to Zimmerer, Scarborough, and Wilson (2005), can be described as the formation of a new enterprise in the face of difficulties and complexity in order to prosper, as well as the pooling of required resources to capitalize on identified opportunities. Based on this definition, Kearney, Hisrich, and Roche (2008) claim that entrepreneurship necessitates being innovative, risk-taking, and pragmatic. Entrepreneurship may also be described as a mindset that prioritizes opportunities over money. It is a process by which individuals search resources regardless of the resources they currently employ (Thurik & Wennekers, 2004).
Usually, friends and family funds are the primary source of finance for small and medium-sized companies in India, followed by private money lenders and the unorganized financial market, where funding conditions are still vague and interest rates are also very high. Moreover, in most situations, lenders prefer to look at the company's productive track record over the last three years, and it is apparent that small and medium-sized companies are not in a position to do so due to numerous reasons such as bookkeeping asymmetry, the family-owned nature of the industry, and lack of knowledge and experience to tap the right kind and source of funding, all of which exacerbate the difference (Jha & Mittal, 2020).